Subject: File No. S7-14-11
From: Ezekiel Chang

In general, the downpayment should be significantly higher than the 5% retention risk banks would need to assume.

Additionally, concerns about individuals being priced OUT of the market are inappropriate.

Expensive housing prices (greater than $200K) in major urban areas are determined by supply-demand. The exorbitant prices are due to the lack of a high downpayment and low adjustable interest rates.

In non-urban areas and smaller metropolitan areas, the housing prices are MUCH more reasonable (less than $200K). A twenty-percent downpayment (less than $40K) is NOT unreasonable as this is double the price of a mid-priced sedan.

The time to save for this could easily be within 8 years (12% a year) based on even a moderate income of $40K annually.

Time spent saving teaches important life lessons.

Additionally, financial leverage is a dangerous game. A 5% stake is TINY amount of risk to bear, especially in reference to the rate of inflation (2-4% annually). Such a small amount down encourages speculation in the housing market.

It is important to take anything banks, construction groups or real estate associations say with a grain of salt. They have a vested interest in excessive housing prices and speculation. This was the cause of our original housing crisis AND the Great Recession.

Please do not allow the Great Recession to repeat itself due to inappropriate financial incentives.